South Florida Arbitration & Litigation Lawyer Blog
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How You Can Help Others Who May Have Diminished Financial Capacity
You may have a parent or other loved one with diminished financial capacity, or who you worry may face that issue in the future. If so, consider the following steps to help.
- Have an open conversation about investments and other financial matters sooner rather than later. Even if it feels awkward, it is important to have an honest conversation about finances. Ask your loved one to consider taking the steps outlined above. Even if he or she does not want to take these steps, ask your relative or friend to consider how he or she wants to maintain control of his or her finances in the future. Explain that advance planning is a way to make sure that a trusted person makes decisions if he or she no longer can.
- Help your relative or friend with managing finances. You may also offer to take a more active role in helping your loved one manage his or her financial accounts. Be alert both to mistakes that your loved one may make in managing finances and to any signs of elder financial abuse. It can be hard to tell whether actions are the result of confusion or of financial exploitation. For example, if you find that a loved one has paid the same bill twice by mistake, you should help him or her fix the error. But beware that multiple or unusual payments could also be a sign of financial exploitation, so don’t rule out that possibility without looking into it. Be on guard for any sudden changes in investments that seem out of keeping with the loved one’s longstanding goals, values and investment style. These changes may have come about because of confusion or may be a sign of financial exploitation.
- If your family member or friend has named you to manage money or property, understand your responsibilities and how you can protect your loved one from financial exploitation. For example, your loved one may have named you as an agent under a power of attorney or a trustee under a revocable living trust. Read the Consumer Financial Protection Bureau’s Managing Someone Else’s Money guides. They walk you through your duties, tell you how to watch out for financial exploitation and scams, and tell you where you can go for help.
If you’ve been asked by a loved one or friend to help out with his or her finances, here are some things you can do to help.
- Help with ongoing financial responsibilities. You may need to take on immediate tasks, such as helping to pay bills, arranging for benefit claims, preparing tax returns, or helping with investment decisions.
- Review their investment portfolio. This might be a good time to help reevaluate the person’s portfolio in light of his or her financial and medical situation. Does the person expect a big increase in health care, personal care or other costs as a result of his or her illness or disability? If so, will he or she have enough cash or liquid assets on hand to cover those costs? (Liquid investments are assets that the owner can sell readily and without paying a hefty fee to get money when it is needed.) These can be complex questions and you may wish to discuss them with a financial professional. Keep in mind that buying and selling investments on behalf of a loved one requires legal authority, through a power of attorney, a trust or similar arrangement.
- Assess the riskiness of their investment portfolio. All investments involve some level of risk. But do the investments present the right level of risk at this stage of the person’s life? If not, you may wish to consider contacting a registered investment adviser representative or registered broker-dealer representative for help.
- Contact their investment professional. If your loved one has a financial professional and has authorized that person to speak with you, make the professional aware of your loved one’s condition. This is critical so that the financial professional can make recommendations appropriate to the client’s financial needs and can watch for signs of declining financial skills or potential abuse.
Your financial professional, or that of your loved one, may raise topics discussed in this article. Financial services firms are paying increasing attention to improving communications on this subject. If a financial professional does not raise these topics, however, you should feel free to raise them yourself.
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With extensive courtroom, arbitration and mediation experience and an in-depth understanding of elder abuse, exploitation and securities law, our firm provides all of our clients with the personal service they deserve. Handling cases worth $25,000 or more, we represent clients throughout Florida and across the United States, as well as for foreign individuals that invested in U.S. banks or brokerage firms. Contact us to arrange your free initial consultation.
At the Boca Raton Law Office of Russell L. Forkey, we represent clients throughout South and Central Florida, including Fort Lauderdale, West Palm Beach, Boca Raton, Sunrise, Plantation, Coral Springs, Deerfield Beach, Pompano Beach, Delray, Boynton Beach, Hollywood, Lake Worth, Royal Palm Beach, Manalapan, Jupiter, Gulf Stream, Wellington, Fort Pierce, Stuart, Palm City, Jupiter, Miami, Orlando, Maitland, Winter Park, Altamonte Springs, Lake Mary, Heathrow, Melbourne, Palm Bay, Cocoa Beach, Vero Beach, Daytona Beach, Deland, New Smyrna Beach, Ormand Beach, Broward County, Palm Beach County, Dade County, Orange County, Seminole County, Martin County, Brevard County, Indian River County, Volusia County and Monroe County, Florida. The law office of Russell L. Forkey also represents South American, Canadian and other foreign residents that do business with U.S. financial institutions, investment advisors, brokerage and precious metal firms.